205 thoughts to “Open Thread Petroleum, May 9, 2019”

    1. Maybe, I can help them with a few of my fingers and toes. Any increase to the US (which I doubt) will be offset by Canada. Brazil is not a factor, nor is Argentina. I don’t see much elsewhere.
      Except demand will increase 1.3 million a day. Outages by Russia are 400k. Conservative drop by Iran would be a million. More of a decrease of 600k from 2018 by Venezuela is conservative. Or, 3.3 million needed, not counting the Libya problems. And OPEC’s hypothetical 3 million would not close the gap, and leaving NO excess capacity.

      1. GuyM,

        Demand is more like an 800 to 900 kb/d increase. Canadian NEB expects about an 840 kb/d increase in Canadian output in 2019, US output increase may be about the same as Canada’s (possibly 700 kb/d for US). Iranian output is expected to decrease by about 600 kb/d. Venezuela’s output decreased by about 450 kb/d in the past 12 months and might continue, the Russian problem will probably be sorted, OPEC is likely to be able to fill the Iranian, Venezuelan and any Libyan gap and non-OPEC decline has been about 250 kb/d so if OPEC doesn’t increase output too much, the oil market may remain in balance. It will not be difficult for US and Canada combined to meet the World demand increase for C+C, note the 1.3 Mb/d increase in World demand is for all liquids, C+C+NGL+biofuels, the C+C annual increase has averaged about 900 kb/d for the past 15 years.

        1. Well, your glass is obviously half full, not half empty. And maybe US will be equal to Canada?

          https://www.jwnenergy.com/article/2019/3/canadian-oil-production-drop-2019-first-time-decade-neb/

          But point taken on world demand. So, if we use your 700 from the US, which I see as a wild dream, and your other numbers, we are at 2.9 million, which I really don’t think OPEC can get to. In time, anyway. There still would be no excess supply. And I really think that 400k from Russia is gone, gone.

          1. GuyM,

            I was mistaken, I looked at the increase from Jan 2019 to Dec 2019, you are correct Canadian output is expected to be a little less in 2019(4507 kb/d) as in 2018 (4578 kb/d) a difference of 71 kb/d.

            The 700 kb/d increase I expect from US output may cover most of the increase in World demand for C+C, I imagine there will more output from Brazil or OPEC that will meet increased demand or oil prices will rise to suppress demand. In the previous two years US output rose by about 1600 kb/d annually, so my forecast is pretty conservative.

            Took a quick look at recent data for Brazil and they have been flat for 2017 and 2018, so perhaps no increase from Brazil, I will assume continued flat C+C output. So that leaves OPEC+ and the US to keep World output increasing. I believe we will see continuing increases in World output through 2024 with the increases getting gradually smaller each year after 2020.

            2. GuyM,

              I wish you were correct that I was not mistaken. Unfortunately I looked at the new revision and simply misread it, I looked at 2019 only, there was a second spreadsheet on 2018 which I failed to open. I made a faulty assumption that 2018 output must be less than Jan 2019 output, I am glad you are here to correct my (many) mistakes.

              Thank you.

            4. GuyM,

              Yeah I try to tell it like it is, or at least as I see it. 🙂

            5. I have a great respect for honesty. Your credibility, already high with me, went up.

            6. thx GM

              Glad you’re back by the way, this blog is way better with your comments.

              I appreciate your contributions.

    2. Yeah. You steal oil by a trickle from a pipleine, maybe by tankers (Somali pirates). The Russian way would be to sell this oil twice, with one party getting just air.But supplementing one oil with another is too sophisticated, and how did thiefs move the huge of amount of clean oil without access to a pipeline…?

      1. It’s a ruse, the theft, that is. The oil was tainted by trying to get the last. Now, there is 400k barrels that will not be produced. My guess.

        1. Who knows. Something is evidently wrong here.
          They were feeding the entire 1,5 mb per day of tainted oil.
          Maybe Romashkino just died. The Russian reserves are not really that big. Vankor has been a disappointment.
          I think everyone is just waiting for Saudis, so they can say ‘peak oil’, at last. Saudis are pacing the market, so to say.

          1. Nobody, but nobody wants to say “peak oil”. Fear of being burned alive as a heretic.

            1. This is exactly the reason why Saudis should do this. Or Russians.
              Don’t have much hope for that, actually.
              They will sooner say ‘internal rebellion’.

            2. They don’t need to say “peak oil”. As long as there are political outages (Venezuela, Lybia, Iran) there are excuses. Only when output dropped a few years (“It is only a temporary decline”) and political outages couldn’t fill the gap anymore, “peak oil” will be declared.

              In my crystall ball that’s not before 2030 – when real peak oil was 2025/26.

            3. Eulenspiegel,

              Agree 100%. If we actually have a 2025 peak, nobody will be aware until 2030, and perhaps later if extraordinary efforts are taken to maintain a plateau as long as possible (perhaps as late as 2035 for realization the peak has come and gone in that case).

            4. Yes.
              And if you look at the long run, we are likely effectively at peak right now (+/-5%). Certainly if you take away all the crop fuel.
              Bigger question is-
              How long will the plateau last (above 80mbpd, say)?

            5. Hickory,

              That’s not a bad way to look at it, if we take 82 Mb/d as the plateau, then +/-5% would be 79.8 Mb/d to 86.1 Mb/d with the “plateau” from 2015 to 2034, the peak year would be 2024 at 86.1 Mb/d and average annual output over that period would be 83.6 Mb/d.

              If we did 84 Mb/d as our “plateau” with +/-3% we would have 81.5 to 86.5 Mb/d for a range which would include 2018 to 2032, with an average of 84.5 Mb/d for the plateau period of my model, so a 15 year plateau for the +/-3% definition of plateau.
              So from that perspective (if the model were correct, which is probably less than 1000:1 odds) we might not realize the peak had been passed until 2032 or later.

            6. Interesting Dennis.
              If we are ‘fortunate’ enough to have a sustained plateau (above 80 mbpd, say) as you have well demonstrated on many charts, that should give a smart culture plenty of time to get some hefty transition to alternatives implemented. Big if on the ‘smart’ part of it.
              And also give plenty of additional CO2 donation to the atmosphere.
              I’m guessing we will be at 450 ppm by 2034.
              I suspect the scramble for fuel may disrupt the international trade once peak conditions have been realized by general global mind. Importers of crude- be forewarned of dicey conditions. In this situation, many of our big economic trading partners will be in very bad shape- S.Korea, Japan, Germany for example.

            7. Hickory,

              Chart below shows one possible plateau, from 2015 to 2034 with average output over that period 83.6 Mb/d and +/-4% being a range of 80.2 to 86.9 Mb/d (above and below the average). The slow decline to 2034 may allow the World to adjust, steeper decline beyond this will be more difficult.
              Hopefully governments and businesses will not be so dumb as to expect the “plateau” to last forever, potentially it will lead to false security and peak might not be recognized until 2040 when World output has fallen to 74.5 Mb/d. EV passenger and commercial vehicles, light rail, rail, car pools, and AVs may mitigate some of the issues by 2040 and demand for oil could potentially fall faster than supply by that point.

              Note that the Shock Model is based on the original work of Paul Pukite (aka Webhubbletelescope) see

              https://www.amazon.com/Mathematical-Geoenergy-Discovery-Depletion-Geophysical/dp/1119434297

              As always, one can click on the chart for a larger view.

            8. Thanks Dennis.
              I still think we’ll be ‘lucky’ if things drop so gradually, but I applaud your work at making thoughtful projections.

            9. Hickory,

              It is certainly possible my assumption of World URR at 3100 Gb is too optimistic, though in places besides peakoilbarrel, my scenarios are considered wildly pessimistic.

              Jean Laherrere has World URR at about 2800 Gb in a recent estimate (Oct 2018).

              Scenario below has lower URR of about 2800 Gb. For this scenario the peak is 2022 and plateau is 2015 to 2027, the steeper decline after 2027 will probably make the peak evident to most by 2032.
              I agree this scenario would be more of a challenge and makes a smooth transition less likely.

              click on chart for more readable figure.

            10. If I were a planner for my family or my company or my country, or a voter (I am),
              I would assume this scenario (URR at 2800 Gb) to be most likely.
              Perhaps with some decent size bumps added to the graph here and there.
              If it turns out to be an underestimate- have a little party.

            11. Hickory,

              I agree probably safer to assume the worst, for planning purposes. I am just trying to give my “best guess”, that is the medium scenario, the low scenario is the “pessimistic scenario” or “optimistic” from a climate change perspective and my “high” scenario (URR=3400 Gb) is the optimistic or pessimistic (environmentally) scenario.

      2. The Russian official explanation makes no sense. Thieves swpping/tainting a quantity of barrels measured in tankers? 400k long term outage for such contamination? BS. I don’t know what they actually did, but they’re lying.

          1. Belarus will take some, but demand on the other might be slightly damaged. So, maybe they don’t need to sell it. Maybe, buyers will seek it elsewhere. Now that they don’t have anymore, anyway.

        2. Yeah, lying makes a lot more sense than their Alice in Wonderland story. But, politicians don’t lie. They mis-speak. Got a lot of it over here, too.

        3. That is not the end of the story 🙂 Tankertrackers reported that they are seeing Russian oil tankers heading for the US 3 days ago. It is soft payment information (not really a big amount) and 3 days old so I guess it’s ok to share. 3-4 tankers in transit (what is really going on??). So, oil is tainted through the pipeline and still Russian tankers are heading for the US? It’s getting pretty obvious there is a problem somewhere, but I am not going to be burned as a “heretic” calling it peak oil. So being independent, anonymous and not being a frontline makes me safe from a horrible fate. I am not sure about the government intervention regarding oil prices or if we are served fake information by agencies anymore. Maybe I am stupid.

          1. Russia sells diesel to USA. I suppose that’s it. How big are those tankers anyway?!
            Besides, Druzhba moves only 1,5mbd. Russia produces more.

      1. They say- “Rystad Energy estimates in its latest cost of supply curve update that the average Brent Crude breakeven price for tight oil is now US$46 a barrel”

        Is this close?, or what is it?

        1. Ok, it is at a lot of different prices, depending on the actual EUR of a well. Let’s say an average is 400k barrels. Royalties are at 25%. Not factoring in transportation costs, expenses to acquire the lease, taxes, etc. you would yield 13.8 million over 12 years to apply against well costs of over 10 million at 46 a barrel. I would not call that break even.

          1. Hickory,

            I would put it at about 33% for royalties and taxes, so that leaves us with 268 kb that we get money for, then deduct $13/b for LOE so we get $33/b times 268 kb or 8.84 million dollars for a well that costs about $9.5 million in the Permian basin, so we would need $48.44/b if we didn’t want to make any money on the well. With a proper discounted cash flow analysis with transport costs included, the breakeven cost is more like $65/b, maybe even $70/b.

        2. Okay, here is the paragraph in the article that should be emphasized.

          U.S. shale oil—which just four years ago was the world’s second most expensive oil resource—is now the second cheapest source of new oil supply globally, just behind the giant onshore oil fields in the Middle East, Rystad Energy said on Thursday.

          What that is telling us is that new oil is getting really hard to find and expensive to produce.

          I, for one, am not at all shocked.

          2. I wonder if the damper has been permanently put on expanding in Alaska. I hope so.

          3. Exxon told their Guyana discovery would have lower break even price than shale oil. In additional it was emention to get same volume of oil out of shale field requieted much higher investmene as more wells need to be drilled. As far as I know a important factor in economy is how many year it takes to return investment as you need to considder best use of funds. Here will a very important issue be decline rate that is much higher in Shale play. It means break even price is only a part of it , if cheaper barrels but take 100 years to get out the last barrels that might be a important element and oilmajours, banks , investors might instead invest in deepwater , presalt i.e

            1. @Freddy
              “would have lower break even price than shale oil. ”
              Maybe with day rates for offshore drilling platforms at an extreme low like it is now, but that could change dramatically if the PoO goes over $100.

            2. https://www.hartenergy.com/exclusives/hess-shares-insight-guyana-oil-discoveries-plans-31692
              Seems Guyana at Liza 2 field can produce at break even 25 usd/ bbl. Liza 1 35 usd/bbl. Guess that compared to the best sweet spots in Permian that soon is history. But the majour benefit beside low break even price is that if same number of wells was drilled in shale formation it will take more than twice as long time to get out same amount of oil . In Guiana oil Companies like Hess and Exoon can re invest the investment in a much bigger Guyana and add that profit while in shale the investment would be looked to the shale play. All this is about geology and reservoir quality, permeability. Off course Guyana is unike and such discovery is seldom happens but still degredation of a well will be important as it will have impact on the time it takes to pay back the investment .

      2. I have stated it several times. Rystad are consultants with the main owner having worked several years for Mckinsey & Co. They have the world’s best database of oilfield specific data on a global level. Or so they claim. I don’t doubt it as they hire a squad of some of the brightest minds to dig for information and make really good estimates where information is lacking. I, and many others are very curious about what they actually got on their hard disks. In my view they are opportunistic about sharing the information. They sway by the wind and bias their conclusions the way customers want it. But their business model is unique and a really successful one.

      3. Well, if your at a loss for words, try BS

        Tsk, tsk, tsk! BS is so coarse an idiom and decidedly lacking in both sophistication and eloquence! It is composed of merely two monosyllabic vocables. If one wishes to properly convey the essence of the con being hoisted upon the unsuspecting marks, one needs to employ more florid phraseology! Perhaps one might orate thusly: ” Tis Finely Refined Yak Dung!”

        Granted, to the uninitiated layman, when presented with equal quantities of BS and Finely Refined Yak Dung, they would be at a loss to distinguish between the two patties.

        Because, while upon first glance, Finely Refined Yak Dung, may look a lot like BS, smell like BS and feel like BS, it requires the highly trained senses of the expert, to truly tell them apart! 😉

        Cheers!

        1. Lol! Yeah, that’s just me. Rude, crude and (burp) socially unacceptable.

    2. Daniel,

      Perhaps those are wellhead prices and the marginal barrel is the highest cost barrel which would be $54/b, with transport cost this might be as much as $64/b at the refinery gate (for marginal Bakken barrels it could cost about $10/b to move the oil to the refinery, at minimum it would cost at least $5/b to move the oil to a refinery for marginal barrels in Texas, so that would be a refinery gate price of $59/b for marginal Texas tight oil barrels. Over time as the tight oil resources deplete and sweet spots become saturated with wells the breakeven cost per barrel will rise.

      Also these analyses often are done on a point forward basis, ignoring land cost, overhead costs, plugging at the end of the well’s life, etc, the full cycle breakeven cost will be higher for the average tight oil well. If we throw in interest costs at 6% and assume 15 years to pay off accumulated debt, the cost rises by another $10/b. So we start to get close to $70/b when we look at all the costs of these tight oil producers.

      2. As we know from the Canadians, plugging costs can be avoided.

        Just cash out your last manager bonus and close the company, leaving behind your 4000 dirty holes and tanks… there was an article the last weeks where a Canadian company has done this

        1. Eulenspiegel,

          Somebody has to plug the well, so from a societal perspective those costs should be included, proper regulations ensure that in bankruptcy plugging of wells would go to the top of the list of claims settled by assets.

    1. They have no alternative, as I posted above. Supply less than demand was going to happen, anyway. We hastened Venezuela drop, but it was already headed there, anyway. Sanctions on Iran? They won’t last. Who are we trying to kid?

      Increasing production in the US is a really stupid direction. Fortunately, I don’t think that is going to happen to the extent imagined. Hurrah, for big oil and investor dissatisfaction.

      1. So, OPEC is a victim of its own rhetorics of ‘amply supplied markets’. What will be a new story…?

          1. That would be a bridge to nowhere, anyway 😉
            And Nowhere seems to be a right word, since Saudis, as a swing producer in a spotlight, are in a very difficult situation. The time of ‘the king is naked!’ cry is coming.

            Maybe they can sell some Kuwait or UAE stuff as their own.They could say, ‘we are pumping 12mbd, see, but what can we do more with Kuwait lagging…’

            At the moment, they are collecting orders (so they will know how much oil ‘to borrow’) and simulatenously unilateraly raising prices for biggest buyers, to cut demand and at the same time get some premium (to pay for an oil loan, maybe: then they can say to Kuwait… see, with us as an intermediary, you get higher price anyway!)

            https://oilprice.com/Latest-Energy-News/World-News/Saudis-Get-Moderate-Requests-To-Replace-Lost-Iranian-Oil-Supply.html

      2. GuyM, you and I seem to be the only ones paying attention to the Occidental/Anadarko/Berkshire developments.

        So we have the majors buying up the Permian. The smaller companies see their exit strategy.

        I think the majors also see the end to the oil age. Not that oil use will end right away, but it’s good to get your money out while you can.

        So the majors control the Permian and presumably have no intention of pumping at a loss. I wonder if Trump or his future equivalent will lean on them to sell cheaper, even if that hurts their bottom line. What threats/pressure will be evoked?

        1. Well, you can create laws to limit production, but I don’t think there are any tools to make them pump more in a free economy.

            3. Yeah! Buy lots of war bonds! Your country needs to buy its debt so it can bomb people in distant lands to take their Oil & land from them. /sarc

              Office of the US federal Treasury
              Washington DC

              Dear Bond owner,

              It come to our attention that you have questions regarding the purpose of the money you have lent your gov’t and the very low returns you are receiving in a time of record gov’t budget deficits. None of this is relevant for discussion. What is important is that you continue to support your gov’t by continuing to buy gov’t bonds and buy them often.

              Thank you for your cooperation.
              Your loving Uncle,
              Sam

  4. The Saudi Plan To Boost Spare Oil Production Capacity

    Saudi Aramco was able to reach record output levels in November 2018 due to its increased capacity as one of its fields came onstream and a bottleneck in another field was repaired. The company’s 2017 annual report noted it was on course to boost output from its Khurais oil field by 300,000 bpd in 2018 to give the field a total daily output capacity of 1.5m bpd. Khurais, which produces Arabian light crude oil, was first discovered in 1957.

    If a diplomatic bottleneck can be eased, Saudi Arabia can also tap its halfshare in an additional 500,000 bpd of production in the neutral zone it shares with Kuwait. The offshore Khafji field was shut down in October 2014 and the onshore Wafra field ceased production in May 2015.

    The shutdowns were caused by disputes over flaring regulations and Kuwait’s objection to having an international oil company operating in the zone. Talks between the two countries over the operation of the fields began in the summer of 2018; however, these appeared to stall in October after a meeting between Saudi Crown Prince Mohammed bin Salman bin Abdulaziz Al Saud and Sheikh Sabah Al Jaber Al Sabah, the emir of Kuwait, failed to reach an agreement.

    Saudi Arabia’s ability to meet spare capacity needs was given a boost in January 2019 with the publication of an independent auditor’s report on Saudi Aramco’s proven reserves of oil and gas, which increased the estimated total by over 2bn barrels. The audit, conducted by Texas consulting firm DeGolyer and MacNaughton (D&M), was commissioned as part of Saudi Aramco’s preparations for an initial public offering that is now slated to take place in 2021. The audit found the company had proven reserves of 263.1bn barrels of oil, 2.2bn barrels more than the estimates of the 2017 annual report.

    All this will be proven or disproven soon ….

    1. Yeah, it all keeps getting overstated. For example the shared fields have only one agreement on the offshore field consisting of about 300k bpd. Because both of these field could interrupt existing Saudi fields, they talked at a cap of around 225k. Saudis don’t even want to discuss the other field. So, the potential is less than 500k, which is probably higher than its potential, anyway. This agreement has been continuing to break down over the past two years, that I know of.

  5. Iran’s Oil Exports Implode As Sanctions Sting

    Waivers on U.S. sanctions for Iranian oil purchases expired earlier this month, and there is evidence that most countries are steering clear of running afoul of Washington. The result is an absolute plunge oil exports from Iran.

    Now let’s see if the Saudi’s can pick up the slack?

    1. Frugal,

      The article says Iranian exports are likely to fall by 500 kb/d or less, pretty sure Saudi Arabia will have little trouble filling that gap if they choose to do so. They might prefer higher oil prices so maybe they will choose to replace only half of that and claim that the market is “well supplied”.

        1. GuyM,

          I was repeating what I had read elsewhere (I believe an earlier estimate that I saw was about 600 kb/d for the drop in Iranian exports due to the May elimination of sanction waivers). Some claim it might even be less than the 500 kb/d reduction, if China and India choose to ignore US threats.

          Clearly we won’t know the real answer until June or July when we have more OPEC output data.

          1. I’ve read somewhere on this blog that the natural decline rate of Saudi oil fields is 8%/year. If so, they may not be able to make up for Iran’s 500,000 barrel/day reduced exports. I think we’ll find out by the end of the year if Saudi has peaked or not.

            1. Hi Frugal,

              The 8% decline is in a situation where there are no new wells drilled and all capital spending on field development and even ongoing maintenance ceases.

              In short, it is a highly unrealistic estimate, capital spending will continue in Saudi Arabia unless perhaps an all out war erupts between Persian Gulf Sunni and Shite nations. In that case we might see the 8% decline rate. Otherwise we would likely only see that rate of decline after 2060 (and possibly later).

              Back in 2008 there were some claiming a Saudi peak, Jean Laherrere estimates the URR for Saudi C+C is about 350 Gb, leaving about 197 Gb of 2P reserves at the end of 2018.
              Let’s assume 50% of 2P reserves are producing reserves and the extraction rate were 4%, we would have 197/2*0.04=3.94 Gb per year of C+C produced or 10.79 Mb/d. Note that a 4% extraction rate is quite low, but we have no idea how much of the Saudi 2P reserves have been developed, for the US in 2017 the producing reserves were about 40% of 2P reserves. If we used that as our estimate for Saudi Arabia then producing reserves would be 78.8 Gb and output of 3.8 Gb (10.4 Mb/d) would correspond to an extraction rate of 3.8/78.8=4.8%, this is about 1.6% less than the average World extraction rate in the 2800 Gb URR model (extraction rate for conventional oil is 6.4% in 2018 in that model for the medium model with URR of 3100 Gb extraction rate is about 5.6% in 2018. Unfortunately we can only guess at Saudi Arabia’s producing reserves, for the US the ratio of producing to 2P reserves varied from 39% to 54% over the 1998 to 2018 period, when we assume 2P/1P=1.5.

            2. Assuming an average daily extraction of 10 million barrels/day, the yearly extraction = 365 days/year x 10 million barrels/day = 3.65 billion barrels/year.

              The yearly extraction rate = 3.65 billion barrels/197 billion barrels = 0.0185 = 1.85% (not 4%).

              On the second point, an 8% natural decline rate with a production of 10 million barrels/day means that they need to make up an extra 800,000 barrels/day/year to stay even. Is this a reasonable number given the stage of depletion in their aging super-giant fields? If for example they can only make up 400,000 barrels/day of the needed 800,000 barrels/day, then they will have peaked.

              And I believe we will find out by the end of the year if this is the case.

            3. Frugal,

              The extraction rate is from producing reserves.

              If we assume 2P reserves are roughly 1.5 times proved reserves (in UK where we have good data from 1975-2017, 2P/1P=1.7) then for the US producing reserves divided by 2P reserves are 40%(2017) to 54% (1998), I used 40% and 50% in my Saudi Arabia examples.

              So if 2P reserves are 197 Gb, producing reserves are 78.8 Gb to 98.5 Gb. The extraction rate is from producing reserves rather than 2P reserves.
              That is how extraction rate is used in the oil shock model.

              As to the 8% natural decline rate, this will have been true since 2005 when Saudi Arabia produced 9.55 Mb/d, at some point Saudi Output will indeed peak, but one year doesn’t really tell the story. I imagine they will remain on a plateau at about 10 Mb/d for many years. I agree that in 5 years we will know the answer, a drop in 2019 may just tell us that the market had adequate supply without the need for Saudi Arabia to pump at maximum capacity. If it (12 month trailing average C+C output) continually drops, then peak may have arrived, we’ll see.

            5. Since 2005, Saudi Arabia has completed several oil megaprojects: Haradh III, Khusaniyah, Hawiyah, Nuayyim, Shaybah, Khurais, Manifa. These megaprojects have cumulatively added millions of barrels/day of production and kept Saudi production on a bumpy plateau ever since. Without them, production would have steadily declined.

              Except for in the Neutral Zone, there are today no planned megaprojects of sufficient scale to compensate for a natural decline 800,000 barrels/day/year.

              So unless they find another supergiant, which is unlikely, or they complete the Neutral Zone expansion, or they apply some radical new technology to their fields, they must be at or very close to peak at the moment.

            6. Frugal,

              I have heard those arguments in the past, I will believe they are at the peak when in a high oil price environment (Brent at over $85/b in 2018 US$ on average for a 24 month period or longer), that Saudi C+C trailing 12 month output shows a declining trend over that high price period. First we need higher oil prices for a sustained period, then we will see what happens. My guess is that they will continue to develop their known oil fields and will maintain a plateau at about 10 Mb/d until 2030 or so.

              If their output does decline as you surmise, the rate of decline will be quite low, under 1% per year until 2040.

            8. Saudi Arabia produced 380,000 barrels per day more in 2016 than they produced in 2018. OPEC peaked in 2016. Saudi Arabia has not kept peak oil at bay. That has been the US of A. World less USA monthly peaked in Nov. 2016 and the 12 monthly average peaked in Aug. 2017.

              Every OPEC nation produced at maximum capacity in late 2018, prepping for coming quotas. Yet that peak was over one million barrels per day below their 2016 peak.

              And to OneofEU:

              Saudis themselves admit 2% yearly output decline, Dennis.

              No, they said with infill drilling they had gotten their decline rate down to almost 2%. Meaning somewhere between 2% and 3%. And that was in 2006. No doubt it is a lot higher today.

            9. Saudi Arabia had high output in 2016 because they chose to overproduce to regain market share, yes that was the 12 month peak in output.

              My main point is that Saudi Arabia is not likely to stop development of their oil fields. The 2% decline rate is in their oldest fields, for their overall decline rate (considering all new drilling and maintenance that occurs) for their trailing 12 month C+C output from Dec 2016 to Jan 2019 has been about 0.5%. I think they may be near their peak, and perhaps it was in Dec 2016 (for trailing 12 month output). The trailing 12 month output in Dec 2018 was 36 kb/d less than Dec 2016.
              Saudi acts as swing producer so its output will fluctuate up and down. I think they will remain at a 12 month average output between 9.5 and 10.5 Mb/d for many years to come and will probably average around 10 Mb/d over the next 5 to 10 years.

              From 2007 to 2019 Saudi 12 month average C+C output has had an increasing trend of 1.7% per year. The decrease from Dec 2016 to Jan 2019 has been about 0.5% per year. It will be interesting to see if Saudi output is affected by increasing oil prices.

              Using EIA data OPEC trailing average 12 month output was 205 kb/d less in Dec 2018 than in Dec 2016, this was mostly accounted for by falling Venezuelan output at 792 kb/d less for Dec 2018 compared to Dec 2016. If Venezuela is excluded, OPEC minus Venezuela output increased by 586 kb/d from Dec 2016 to Dec 2018 for trailing 12 month C+C output.

              That was a political problem, long expected.

    1. I consider Saudi capacity as their highest 12 month output level for C+C. That number is about 10,460 kb/d, so if that remains their output capacity, they can add about 750 kb/d to World output above their March 2019 output levels and sustain for 12 months.

      2. Here we go again, with cornucopian Mr Coyne and his abiotic Saudi oil theory. Enough already! This is supposed to be a peak oil blog not an abiotic oil one.

        1. I comprehend the uncalled for insults, but nothing disclosed your viewpoint.

          1. Let me elaborate. Anybody that can believe in the official report on the Saudi’s supposed oil reserves of approx. 265 billion barrels, when in the early 80’s the stated reserves were very similar with very little discoveries since, must believe in something along the lines of the abiotic oil theory. Please note I am being somewhat sarcastic.
            Secondly, a cornucopian is someone who believes that some new technology will always save us. Someone with this belief, does not understand the energy density of fossil fuels in relation to other forms of energy. If you go back in the archives of this site you will see many examples of Mr Coyne talking about the world transitioning to alternate forms of energy. This by its very nature is cornucopian.

            1. He stated that SA could go up 750k for a 12 month period. I assume he meant after that, it would be pushing the nickel. To me, 750 was within the realistic area, while almost everyone else is going with the 1.5 million that is quoted constantly in the press. He’s going against the mainstream, which I think are wrong. Hardly abiotic.
              I know what a cornucopian is. I think he is more altruistic than I, but not cornucopian. Predicting much higher oil prices, and resulting difficulties that can result hardly fits into the concept of being a cornucopian. He sees the world surviving, and so do I. However, it may get far worse than he predicts. Still, that does not qualify him to be called a cornucopian.

            2. The issue about Saudi reserves was debated on a previous thread and Mr Coyne categorically believed the latest report on stated Saudi reserves provided by the KSA themselves.
              Forgive me for being somewhat irate but how can one be so naive as to believe this. In 1980 the KSA proclaims reserves of 265 bbls and nearly 40 years later after pumping approx 10 million barrel’s per day and voila’ you still have 260 bbls of reserves. If one believes this then the only conclusion I can make is that one must believe in the abiotic oil theory(sarc).

            3. I, indeed, have questions on how much is actually retrievable. So does Ron, and so do many others. Still, you can’t fault Dennis as being a cornucopian over this, as it is Highly up to debate. First of all, you have to consider the first one was in 1980. There is a lot more advancements in technology, that could make a difference in how it was measured between 1980 and 2018, almost a forty year difference. I tend to think the difference lays in how much SA paid the “independent company” to come up with the figures. But, there is no proof, and there is no proof they lied. I could never fault someone for being cornucopian because they believed “independent audits”,especially when the “independent audit” was done by a company out of Texas?

            4. Dennis regularly acknowledges that predictions will be wrong. We all know that crude oil reserve data- esp coming from places like Russia, Saudi, and the US oil patch, are extremely poor. Not only is the stuff underground, but there are a lot of big agendas. The data will be way off.
              Predictions are only as good as the model, the data, and the assumptions. You just do the best you can with what you’ve got, if you operate in that arena.
              If you expect anyone to be right, you are setting yourself up for a big disappointment.
              Go ahead and give it a shot if your so confident as to sling the mud around Craig.

            5. Good luck with that. While I may question some of the assumptions, I could not come close to approximating his precision in math. Or, we can elect to treat this forum as a friendly place to listen, and converse with others, to clarify our own ideas. Which, takes as a guide, Dennis’ ability to say, whoops I was wrong, as indicated in the above discussions. Which to me, is the essence of intelligence. You really think all the great minds operated in a vacuum?

              What is a purpose is there of having a forum like this? I’ve got a pretty good idea, and it not that Ron or Dennis have to prove themselves being correct. Because, I have never seen that being the purpose, or I would not bother.

            6. GuyM,

              Well said. I certainly do not know what the future will bring, I guess, as does Ron and many others based on the data we have.

              I would be interested which assumptions you were thinking of in particular that you do not agree with. Often we disagree a bit but usually we are roughly on the same page.

              I only ask because often when we don’t agree, I come around to your point of view once I understand it fully.

              Generally your insights are excellent and I learn from them as is the case from many others (Ron, George Kaplan, Mr. Shellman, Shallow Sand, South La Geo, Fernando Leanme, Enno Peters, Dean F, and no doubt many others who I have failed to name .)

            7. Craig,

              In 1979 Saudi 2P reserves were 177.5 Gb, there is a constant revision of reserve estimates over time as more knowledge of the field is gained by drilling and production. Note that at the end of 1978 about 35 Gb of C+C had been produced by KSA, so with the 2P estimate and no future reserve growth the URR would be 212.5 Gb. Hubbert Linearization for KSA from 1998-2018 points to a URR of 330 Gb, suggesting about 117.5 Gb of reserve growth from 1979 to 2018. So 2P reserves grew by 66% over 40 years (1.3% annual growth rate), this compares with US reserve growth of 63% over 25 years (2% annual growth rate).

              If the HL estimate is correct (often these estimates tend to be too low) for Saudi Arabia, then remaining 2P reserves at the end of 2018 would be about 177 Gb. I would say that we don’t know what Saudi Reserves are because there have not been independent audits of their reserves.

            8. Oh, I never said you paint a “rosy” picture. I think they are spot on, based on hysterical data. World production is not my expertise. Matter of fact, I have a dearth of oil expertise. I never ran pipe on an offshore rig like my brother, pushed tools like my Dad, and especially don’t have the knowledge and abilities of my Grandad, who ran his own drilling company. Just a simple CPA who reads a lot about it, nowadays, and makes guesses based on trends.

              There are two big directions which may upset some of your hysterical projections. The first being, there is no growth yet in the US, and probably won’t be much for this year. You anticipate 700k growth, I would say 100 to 200 would be the high, and that would come later in the year.

              The second is the effect of oil majors taking over shale. Hostile takeovers? Probably not. There should be little complaint out of most boards and major shareholders. By now, everyone knows there is a very limited lifespan left for their company. Getting the right price will be the issue.
              Majors have no interest in increasing exports, except for refined products. The growth years of shale are limited by how soon the majors take over. The Oxy deal? I smell Shell oil, but could be another. Then, that’s probably over 80% of the Permian controlled by the majors.
              And Marathon may want to check the back of their shirt. That may be a target drawn on it.

            9. Oh, I never said you paint a “rosy” picture. I think they are spot on, based on hysterical data.

              Oh, come on! I don’t think the data is all that hysterical.

              There are two big directions which may upset some of your hysterical projections.

              Well, now you’ve got me. Dennis’ projections are often hysterical. 😉

            10. Hi Ron,

              For my “low scenario”, consistent with Mr. Laherrere’s URR estimate (2600 Gb for World C+C less extra heavy oil and 200 Gb for extra heavy oil). The peak is 2022, which is not very different from your 2018 peak followed by an undulating plateau.

              GuyM,

              There are a couple of ways of looking at output, if we use an annual average output (as I do in my World models), then US annual average output in 2018 was 10.96 Mb/d and an increase of 700 kb/d would bring the 2019 average to 11.66 Mb/d, in Feb 2019 output was 11.68 Mb/d, so if we had flat output from Feb 2019 to Dec 2019, then annual output would have increased by 700 kb/d over the 2018 average.

              So where you think my assumptions are incorrect, perhaps we actually agree. So far the decreases have been from GOM which has unpredictable ups and downs, tight oil output has continued to increase since the end of 2018 and although I agree the rate may slow from a 1600 kb/d annual increase to perhaps 700 kb/d, I doubt we will see a decrease to 150 kb/d. Note that I am often wrong, though typically my guesses have tended to be too low (for output) rather than too high. That might change, we will know more in 12 months.

            11. Dennis, my post was just a joke and nothing more. I thought it hilarious that Guy wrote: “hysterical” when I am sure he meant “historical”. It was probably his spell checker that screwed things up and he never noticed.

              Nevertheless, I thought the error was hysterical and I just could not resist the jab. 😉

            12. GuyM,

              I assume you meant historical data? Rather than hysterical data. 🙂

              Ron got it, I missed the hysterical historical thing on the first go. You are a funny man, historical in fact. 🙂

            13. GuyM,

              Often my scenarios are indeed a bit on the optimistic side, but there are typically caveats such as if good policies are followed, such and such might occur. Keep in mind that I am fully aware that wise policies are rarely followed (they are the exception rather than the rule). So the rosy pictures that I often paint are done as a counterpoint to the doom and gloom preferred by most who post prolifically on this blog. I expect reality to be somewhere between the doomerish view and my optimistic scenarios. The transition is likely to be exceedingly difficult, social upheaval, wars, recessions, etc. Possibly even Great Depression 2 if stupid economic policy is chosen (similar to the European response to the GFC) over more intelligent Keynesian policy in response to a likely GFC2 in the 2030 to 2040 time frame.

            14. I meant to put hysterical as a play on oil data, that is never truly correct, like some companies financials. It’s a stupid accounting joke, and assumed most would get it. The end result was the same. Stupid humor.

            15. I love stupid humor. Airplane is still one of my favorite movies. Not to mention the Three Stooges….masters of stupid physical comedy.

            17. Craig,

              https://www.britannica.com/topic/cornucopian

              My viewpoint is quite different. I acknowledge that the Earth’s carrying capacity is limited and believe that falling total fertility ratios will lead to a peak in human population as more nations become developed (peak in 2070 with declining human population to about 2 billion by 2150). As to an energy transition to non-fossil fuel energy, I believe this is indeed feasible over the next 50 years or so, and more quickly with appropriate policy that recognizes the danger of climate change.

              A cornucopian would see no need for any such changes because they would believe that technology would allow unlimited extraction of fossil fuel that population could expand without limit and that technological progress can solve any problem.

              In my opinion that position (the cornucopian position) is delusional.

              There is a middle ground between Pollyanna and Henny Penny (aka Chicken Little), that is where my position is.

        2. Craig,

          Nope not abiotic oil, just reserve growth similar to what we have seen in the US from 1980 to 2005. See following from 3 years ago.

          http://peakoilbarrel.com/us-oil-reserve-growth-2/

          Also consider my estimates for World C+C less extra heavy oil are only slightly higher than those of Jean Laherrere (his estimate is approximately 2500 Gb for World URR of C+C less extra heavy oil) by about 400 Gb. USGS thinks World conventional URR is 3000 Gb, Hubbert linearization suggests about 2400 Gb for World conventional C+C (excluding extra heavy and tight oil output). I assume the average of these two (2700 Gb), but add an extra 100 Gb.

          Note that Mr Laherrere and Mr Patterson have called a near term peak on several previous occasions and they were incorrect. I myself have predicted a 2019 peak back in 2012, with a peak at 80 Mb/d (too low due to too low a URR of 2800 Gb for World C+C), so I am subject to the same criticism for being too pessimistic back in July 2012.

          see https://oilpeakclimate.blogspot.com/2012/07/an-early-scenario-for-world-crude-oil.html

          and https://oilpeakclimate.blogspot.com/2012/07/further-modeling-for-world-crude-plus.html

          Seven years later my estimates are different with higher URR (3100 Gb vs 2800 Gb or 2600 Gb back in 2012).

          Recent Saudi 12 month C+C output (for Jan to Dec 2018) was about 10.42 Mb/d (EIA data) and crude only was 10,311 kb/d in 2018 (OPEC data), in March Saudi crude output was 9794 kb/d, so there may be the possibility that 517 kb/d of extra output can be provided by Saudi Arabia.

          For OPEC minus Iran and Venezuela 2018 output was 26958 kb/d in 2018 and in March OPEC minus Iran and Venezuela output was 26592, so there might be some difficulty picking up the slack from further decreases in Iranian and Venezuelan and possibly Libyan output. If supplies are short OPEC might be able to hit 4Q2018 levels of output (excluding Iran and Venezuela) which is about 1200 kb/d over March 2019 levels. We will just have to wait to see what happens, predictions are usually incorrect.

    1. This year is definitely interesting, and will become a shocker by year end. Hey, Dennis. Your NM part of the Permian is down by 4%, in one week.

      1. GuyM,

        But Texas Permian horizontal Oil rigs (HOR) are up by 2. Also the NM Permian HOR count is 2% higher than the start of 2019 and Texas Permian HOR count is 10.8% above the count at the start of 2018, but down 4% from the start of 2019.

        For the overall Permain HOR count we have the chart below (which in my view is the chart that matters most for US tight oil output.) Current Permian HOR count is 3 above the count from May 18, 2018 (420 vs 417). The average Permian HOR count was 417.6 in 2018, current Permian HOR count (WE 5/10/2019) is 420.

        1. But, the Permian shale make up less than half of the US production. A large part of Texas, but far from all.

          1. GuyM,

            Pretty much all of the increase in US output since Jan 2017 is accounted for by the increase in tight oil production and the increase in Permian output was about 64.7% of that increase in US tight oil output, so it is pretty important. You are correct that Permian output only accounts for 46.7% of all US tight oil output, the main point is that it’s rate of increase is far higher than most of the other tight oil plays over the past 2 years.

            Essentially it is the play to watch.

            If we look at the rate of increase in Permian tight oil output from Jan 2017 to March 2019, it has averaged 40% per year over that period (OLS fit to natural log of Permian tight oil output for those 27 months.) For Non-Permian US tight oil output over the same Jan 2017 to March 2019 period the average annual rate of increase was 16%. The Permian should be the focus in my view.

        2. Chart with US and Permian Horizontal Oil Rig (HOR) count from Jan 2015 to May 2019.

    2. Ron will have an OPEC post up shortly after the next OPEC MOMR comes out.

      1. ok, my fault. saw the news about opec numbers and did not check that it was opec momr

  10. Here are G&A’s views on Saudi Aramco’s oil reserves. The second link is their newsletter. I guess with any oil reserve estimate it depends on how viable the secondary and tertiary recovery techniques really are?

    March 20th 2019 (Goehring & Rozencwajg Associates, LLC) Facts or Fiction? Saudi Aramco’s New Oil Reserve Report
    Back in 1979, total Saudi Arabian oil-in-place figures were approximately 530 bn barrels (a number which appears in various reports many times). At the time, proved reserves were pegged at 110 bn bbl suggesting a recovery factor of 20%. At the time, this figure was in line with both the US average recovery factor of 23% and consistent with the assumed limit of a field producing from solution-gas drive. Since then, secondary recovery and tertiary recovery have steadily increased recovery factors. Based on the latest technology, 70-80% recovery factors are possible under ideal situations using both secondary and tertiary recovery techniques.
    Their blog -> http://blog.gorozen.com/blog/facts-or-fiction-saudi-aramcos-new-oil-reserve-report?

    Goehring & Rozencwajg – Natural Resource Market Commentary – First Quarter 2019
    Oil Markets: Major Developments on All Fronts (PDF file)
    https://cdn2.hubspot.net/hubfs/4043042/Commentaries/2019%20Q1%20Commentary/2019.Q1%20Goehring%20&%20Rozencwajg%20Market%20Commentary.pdf

    2. Based on the latest technology, 70-80% recovery factors are possible under ideal situations using both secondary and tertiary recovery techniques.
      And:
      The article’s precise number is 77% RF.

      The world average is about 30%. A very good article on enhanced recovery rates can be found here:
      Recovery rates, enhanced oil recovery and technological limits

      EOR methods are discussed. I found this line interesting. It concerns the efficiency of the EOR methods:

      It can even be seen that if each of the efficiency factors is a very respectable 80% then the overall RF is only 41%. Increasing RF therefore requires each of these factors to be increased to close to 100%.

      77% is a totally absurd figure. But I don’t doubt that Saudi Arabia is basing its proven reserves on such a hopeful figure. I can hear them now: We will recover 77% of the oil in the ground inshallah. Almost every sentence the Saudi’s speak ends in “inshallah”. If they end every pronouncement with the word “inshallah”, then they are not lying.

      Inshallah is an Arabic expression that means “God willing,” or “if God wills it.” I remember once landing in Daharan when the pilot said; We will be landing in about 20 minutes, inshallah.” We landed safely so I suppose God willed it so. 🙂

    3. Note that the proper number to consider is 2P reserves which were 177.5 Gb in 1979, and there were 35 Gb that had been produced by the end of 1978 so total produced oil plus 2P reserves were 212.5 Gb which suggests a recovery factor of 40%. The HL for Saudi Arabia using 1998 to 2018 data suggests a URR of 330 Gb, if the OOIP estimate has not changed (this number often increases as knowledge improves) then RF would be 62%.

      Pretty good summary at link below
      https://www.reuters.com/article/us-saudi-oil-kemp-idUSKCN0ZL1X6

    1. Trump tells us oil prices are TOO HIGH!

      Wonder what $20 oil that Trump prefers and HHH predicts would really get us besides a lot more industry bankruptcies.

      Why would “Saudi America” want $20 oil?

      Chapter 11 is a wonderful thing for consumers. Keeps the cost of gasoline cheap.

      1. Shallow sand,

        Are things a bit better with $60/b WTI, as I recall that was considered the sweet spot for you a few years ago, though rising costs might have changed this.

        Hope things are going well for both you and Mr. Shellman.

        1. Dennis. Things were going good until 11/18, when the price started to crater. Thankfully we are back up. However, our price for December through March averaged $48 and change, which is making money, but not much.

          Expenses have stayed relatively stable. Labor goes up a little each year. Electricity has actually dropped a few percent. Chemicals have stayed the same since we received a 10% cut in 2016. Steel is up some, so rods and tubing are a little higher.

          $55-65 WTI would still be ok. Liked $70s last fall, before the Donald got involved with Iran waivers and tweets.

          My comment was poking at the Donald, et al, who think that since $25 was a great price in 1990 it should still be ok today.

          Clearly, although $55-65 is good for us, maybe not good enough for others. In particular, the service companies who continue to lay bleeding to death on the side of the road.

          We still have no plans to drill. Have five workovers planned for summer to fight the decline.

          1. Shallow sand,

            Yes I was sorry for the drop in price over the winter for you and Mike. I agree the tight oil producers and service companies will not thrive at $55 to 65 per barrel, I imagine they need $70 to $80/b to thrive, perhaps $60 to $70 might be the sweet spot where tight oil producers don’t over produce, but can survive. Your guess and Mike’s would be far better than mine as you guys know the business and I do not.

            Thanks.

            Did you compete any new wells in 2018, when oil prices were high?

            1. Dennis, you are kind; thank you. My belief is that if one can’t make money at $50/2.50, and cope with 30% price swings for months at a time, one should be in the lawn mowing business instead. The US shale oil industry could therefore keep most of America looking like Augusta National.

              A word about the LTO metric of the month, free cash flow. Cash flow ain’t “free” if one is still in debt. IMO, 1Q19 was awful for the US shale oil industry. It used cash flow for buy backs, to meet dividend demands by pissed off investors, to pay absurd prices for undeveloped acreage in the Permian, for reserve replacement (75% of ALL wells now drilled in America’s shale basins simply offset last year’s annualized decline) and still eked out a little growth. Nothing to very little went of nothing went to voluntary deleveraging. At less than $75-80, it can’t be done.

              Hughes has a new report out clearly showing Mother Nature is having Her say in the shale oil phenomena. Nobody messes with Mother Nature.

            2. Thanks Mike,

              Agree higher oil prices are needed for tight oil producers to reduce their debt. If long term oil prices remain $50/b, they are toast.

              I read a blurb on the new Hughes paper, but I am a bit of a cheapskate and was not willing to put down $250 for the report so I have not read it.

              From your perspective, do you think oil prices are likely to remain $50/b long term? (lets call it the 52 week average oil price). It seems to me there will not be adequate supply on the World oil market at $50/b, perhaps $65 or $70/b (in 2019 US$) would do it.

              You know infinitely more than me about the oil business and you have been in it for a while (40+ years as an owner I believe), so your take would be of interest to me and I imagine everyone who reads this blog.

            3. Mike,

              Robert Rapier has an article–new, I think–about Free Cash Flow at OilPrice. Nicely detailed.

            4. I see rumors that Halcon will soon be filing bankruptcy for the second time.

              The CEO made his money in the EFS, by selling out of course. Proceeded to go BK in the Bakken and now looking to go BK in the Permian.

              Someone needs to give him a shot at the SCOOP or some other shale play. He might even run the company for under 7 figures a year instead of eight.

            6. Syn. The Donald and the shale industry do have in common billion dollar net operating losses.

              Unfortunately, the President seems intent on loss making commodity prices. I guess people spend more at hotels, casinos and golf courses when food and fuel is cheap.

              I haven’t seen such gloom among the farmers since the Farm Aid era.

              We are setting up for a weak yield this year. Late crop. If July/August goes hot and dry, could get ugly with $3 corn, $7 beans and $4 wheat.

            7. He just following Donald Trumpet’s business model: By an asset using debt: Gut it for salary and when there is nothing left, declare bankruptcy leaving the investors\bank as the bag holders.

              Same crap as Bernie Madoff, just with a better execution plan to avoid jailtime.

            8. Dennis. Sorry, I missed you question.

              No, we have not drilled and completed a new well since the fall of 2014.

              Keep in mind that during the high price period we would just drill 2-4 new wells per year.

              2018 actually saw the lowest level of activity in our field despite higher prices. No new leases (meaning installation of gathering infrastructure). I am just aware of an infill well here or there.

              The operators in our county use their own money. I know of a larger operator in an adjoining county who has access to investor capital. Has been drilling since 2017. The company picked up some conventional production from a junior shale co that has long ago went BK, I think the transaction was completed in 2016.

            9. Thanks shallow sand.

              I suppose in this unstable price environment drilling a new well is a very risky bet, one that only the most aggressive investor would make. Probably picking up old wells on the cheap and reworking them (after thorough investigation) probably makes more sense, or just maintaining the wells you already have an interest in (where you know better what you are dealing with) makes the most sense of all. You have also been at this for a while (though not as long as Mr. Shellman), any guess on future oil prices, maybe 50-70 for WTI over the next 12 months?

      2. The technicals on the WTI chart stemming from the 2008 highs and the 2009 lows. Opens up the door technically for WTI to visit a price that is just above $20 in the $21-23 range sometime between 2020-2022. It’s actually a giant falling wedge. It’s also about as clean of a technical pattern as your ever going to see on a time scale that long. The bottom trendline in this wedge originates off 2009 lows and touches 2016 lower lows. If you follow the trendline on out it intersects at a price around $21-23 during the year 2021. The top trendline originates off the 2008 highs touches 2014 highs and again 2018 highs. Price is nowhere near challenging this top trendline time wise. I believe ultimately we will get higher prices. But not until 2022 and beyond time wise.

        Only way oil would stay at $20 is a depression that we never recover from. But technically there is a way for WTI to reach a price just above $20 between now and late 2020-2021. The one trendline that is in the way of oil visiting $20 isn’t likely to give a great deal of support. Which is why i favor a trip to near $20. But hey it might hold. But time wise we still have a ways to go to even reach it. Price should be very choppy. Up down Up down. Just a little more down than up until we reach that trendline support. I’ll be very surprised if we reach this trendline support before late Sept-Oct of this year. Could be early 2020 before price finds this trendline support. Then after that If it breaks below the trendline $20 is still a year or a year and a half away timewise on the chart.

        Soon as price reaches this first and only line of support i’ll let ya know that it did.

          1. Love that expression. I rarely hear it used nowadays. My aunt, who was an English teacher, uses it frequently, so I knew it was “proper”. From abated, old English since, at least, Shakespeare.

        2. Are you focusing on WTI or Brent? Brent is the more relevant price for World oil market.

          Futures market has Dec 2022 Brent at $60/b,
          Dec 2021 at $61.40 and Dec 2020 at $63.92, so futures traders see lower future prices, though not $23/b.

          I would say the trendline you are drawing is a highly unlikely future scenario. The oil glut of 2015-2016 is not likely to be repeated until 2040 or later, if EVs ramp up in a big way from 2019 to 2040. That is another scenario that is unlikely, probably 2050 or later would be a more reasonable guess for a drop in Brent oil prices to under $25/bo in 2018 US$.

            1. Iron Mike,

              Strange analysis, to me the trends change randomly and the fundamentals of the oil market are likely to determine the future price. Supply is likely to be short at current oil price level and if that is the case oil prices are likely to rise. A glut in the oil market like 2015 is unlikely to recur for 30 years in my opinion (perhaps 20 years in a very optimistic Tony Seba world).

            2. Dennis,
              Not my analysis, just an illustration of what i think HHH is talking about.

            3. Iron Mike,

              Yes thanks. Just seems an odd way to predict future prices, my guess is that it would be wrong much more often than it is correct.

              I tend to agree with Ron that the “technical analysis” is crap.

            4. Oh no! Be careful! Fred’s around, he might hear you. The proper term is highly refined Yak Dung.?

            5. From the little i know Dennis, i believe TA relies on psychology and heard mentality more than anything else. Since my track record of predicting the future is awful at best, i will keep quiet on the topic lol.

            6. That is brent monthly chart. The technicals are a lot cleaner on WTI chart. These type of wedge patterns typically, ultimately brake out to the upside.

              You have also got to understand the technicals on shorter term charts to arrive at why there is a really good chance oil visits near $20 before bouncing off the WTI bottom of the wedge trendline that is equal to the one you see above on the Brent chart.

              See 2016 lows in the middle and 2018 lows. There is a trendline there that is not drawn on the chart which is the last line of defense so to speak. If it doesn’t hold there is a really good chance price hits the bottom of the wedge.

              People tend not to believe what they don’t understand. A lot of people here don’t understand why technical analysis works. And if i showed you everything i knew about it you’d still more than likely not understand why it works.

              I make my living knowing where support and resistance are on chart. I trade between them. Leaving a little meat on the bones so to speak when i exit a trade. Then i just wait for the next set up to go long or short. You can take what i’m saying for whatever you think it’s worth. It’s no skin off my back either way.

              One other thing of note. Watch the chinese yuan against the dollar with the ongoing trade war. If it breaks out above 7. Dollar is going to strengthen a lot. Which will put some downward pressure on oil.

            7. Going long while declaring WTI going to $20? You are sure to also declare victory. What a fraud.

            8. Dude what the hell are you talking about?

              All i did was lay out what the technicals are. I don’t make up what the technicals are. They are what they are. I don’t get to decide what they are. But i know what they are. And i can call bullshit on any analysis done be it by a big bank or some internet guy claiming WTI was going to $70-80 by end of year.

              Because i know exactly how to break a chart down. Sorry if that doesn’t jive with what you might have been told was going to happen. Or what you believe might happen. Furthermore i’m not selling anything or accepting money for anything.

              I’m just giving the honest truth about what the technicals are saying. I already know price is going to visit trendline support coming off 2016 and 2018 lows. Because price got rejected at resistance. It’s just a matter of when and at what price. The trendline either holds or it don’t. If it don’t price near $20 is a real possibility.

  12. Baker Hughes (GE) International Rig Count for April
    (without the USA or Canada)

    Total +23 to 1062
    Split: Oil +12 to 836 and Natural gas +10 to 197 and Misc +1 to 29
    Split: Land +19 to 811 and Offshore +4 to 251
    Chart showing the total: https://pbs.twimg.com/media/D6R5YpoXkAAGCZy.png
    Chart showing just oil: https://pbs.twimg.com/media/D6R5-siW0AA0zTf.png

    Iraq +6 oil
    Saudi Arabia +6 oil -1 gas
    Mexico +5 oil
    Thailand +2 oil +2 gas
    UK +3 oil -1 gas

    Oman +3 gas
    Pakistan +3 gas

    Brazil -2 oil
    Offshore China -2 oil
    Colombia -3 oil

  14. Are any of the regulars here willing to predict which countries will flip from net exporters to net importers over the next few years?

    And does anybody who focuses on the supply side, as intended on this part of the site, consider the likely coming reduction in domestic consumption in countries such as S A, as solar power is used to offset domestic oil consumption as generating fuel?

    It seems likely that Middle East exporters can save at least a million to two million barrels per day, by going solar, and earn a substantial profit by doing so, selling some or most of the oil they currently burn to generate electricity.

    In terms of the big picture this might not be enough to really matter…….. a couple of million barrels per day isn’t all that much, considering world wide consumption and depletion, but it might turn out to matter a LOT, if it focuses the attention of the banking world.

    https://www.sciencedirect.com/science/article/pii/S0301421512003114

    Abstract

    We analyze the rapid growth of Saudi Arabia’s domestic oil consumption, a nine-fold increase in 40 years, to nearly 3 million barrels per day, about one-fourth of production. Such rapid growth in consumption – 5.7% annually, which is 37% faster than its income growth of 4.2% – will challenge Saudi Arabia’s ability to increase its oil exports, which are relied upon in long-term world oil projections by the International Energy Agency (IEA), US Department of Energy (DOE) and British Petroleum (BP). However, these institutions assume unprecedented slowdowns in Saudi oil consumption – from 5.7% annual growth historically to less than 2% in the future – allowing them to project increases in Saudi oil exports. Using 1971–2010 data, we estimate that the income responsiveness (elasticity) of oil consumption is at least 1.5—using both Ordinary Least Squares regression and Cointegration methods. We believe that continued high growth rates for domestic oil consumption are more likely than the dramatic slowdowns projected by IEA, DOE and BP. This will have major implications for Saudi production and export levels.

    https://www.reuters.com/article/us-saudi-energy-reforms/saudi-arabia-sees-domestic-energy-use-falling-plans-renewables-push-idUSKCN1P918N

    “The kingdom, which burns about 700,000 barrels per day of oil for electricity in the hottest months from May to August, has hiked the price of gasoline and electricity for its citizens in a bid to curb domestic use of crude so it can export more. ”

    It sure as hell looks like the Saudi’s and a bunch of other nearby super hot and sunny exporting countries should be building solar farms flat out, considering the revenues they could be bringing in by selling the oil they are currently burning to produce electricity………. but maybe they either do have enough to burn it, literally, as they claim to, or maybe they believe that the market for it will gradually go away, and that they will never be able to sell all they have anyway.

    When we start seeing articles prominently featured in the mainstream media about the Saudi’s and their neighbors actually contracting for solar farms on the grand scale, we can take it as more proof the peak is not that far off, or maybe even behind us, by that time.

    1. From what I understand Mexico recently transitioned from net oil exporter to net oil importer.
      This site used to be useful for visualizing production, import and export volumes.
      https://mazamascience.com/OilExport/
      But it appears not to be updated in 2 years.

    2. OFM Wrote:
      “Are any of the regulars here willing to predict which countries will flip from net exporters to net importers over the next few years? ”

      Yup, thats an easy one: The United States.

  15. Nobody should reply to the post by PODPIS. It’s spam.

    Dennis or Ron, you should delete it.

    1. There is a $1B cancellation fee they get. Anadarko withdrew from the agreement because OXY’s bid was superior, but CVX is entitled to $1B on the withdrawl.

      This is not unusual. There used to be companies that did this often when they were sure they’d be outbid for anything at all.

  17. FYI> Natural Gas… Germany invented a novel way to convert NG to fuel (petro). Involved temperatures of 3000K (bit high) but did work. Nice way to move NG around from the gulf to Elsewhere. Issue: getting temp up via standard methods..heat… consumes as much NG as getting temp down (Liquidfied NG)… so answer is a cheap physics trick: solo luminescence… where 40K temps via sound waves create the conditions ..

    1. Cool! Still lots of NG in the US. They are giving it away in the Permian. Wonder what the conversion from mcf to barrel would be?

      When I was about 9 (1958). Lasers and Masers (from sound waves) were thought about, but mostly relegated to science fiction, which I loved. Read about it from books, the only thing available. Now, they have the classification of old science?

      From a standpoint of value, it has the potential of lowering the price of oil that I get, but also has the potential of raising the amount I get from my gas. Don’t see a loser for me. And the Pearsall shale underneath my Eagle Ford has gas, too. Mostly ignored, as who needs more gas in Texas? Directly underneath, the Pearsall has shown to have a significant amount of oil, too. They just can’t keep it from clogging, yet.

      And it could make Apache a significantly more valuable company.

      And, it could wind up making the US energy independent (really) for another 50 years, or so. Long enough for any transition. Hope it’s true and truly functional.

      Another potentially correcting factor on your projections, Dennis?

      Wonder if all these companies that are flaring have realized that they may be watching their gasoline inventory go up in smoke?

      I assume googling it won’t do me any good, I could make out the first word in German. But, your posts have always been good, so I assume it is fact.

      It’s a very low cost addition to the refinery process to convert that to other products, including refined gasoline and some diesel, and naptha forever. But I have no idea what the cost of the process is. You make it sound cheap.

      Wow, think of the improvements it could do to the economy with cheaper gasoline.

      1. If true, it would have to be a much bigger game changer than horizontal drilling in shale plus oil sands. Is it possible they don’t even know the magnitude of what they have done?

        Heck, they could set up plants to convert gas to gasoline, and ship it to Houston on the excess pipeline capacity that they are constructing. At a conversion of 10 cents per mcf to $2 a gallon, less conversion cost, that would have to be a killer profit.

        But, I have been able to find zip on this from seaches.

        1. And, I’m basically confused as to the transformation. With pressure and cooling, it turns into a liquid (Lng). With heat, it turns into a liquid (petrol). I would think those little molecules would be traveling faster, and expanding the gas.???
          Limitations of high school chemistry.

          1. Guy, LNG is still natural gas, just a lot colder and under pressure. The petrol made from natural gas, via the process described, is no longer natural gas, it is much longer polymers.

            1. So that, has to be a game changer. Still peak oil, just not peak petrol. Of course, if we continue to increase petrol demand, we just run out of NG sooner. But, the real question is, will this polymer work in my Nissan Versa. After all, Cameron uses the term petro, which I assume is European, and not sure it’s equivalent to petrol.

              And an inadvertent mistype?
              https://en.m.wikipedia.org/wiki/Sonoluminescence

            2. I wait with bated breath on more info about this. The applications of this technology may change how everything looks.

            3. Shell built a Gas to Liquid Plant in Qatar about 10 years ago. I think it cost about $25 Billion and never made a profit. I believe its been running in a partially shutdown state since 2014 to save operating costs. I think it needs $80 to $100/bbl Oil to be profitable.

              Considering all of the new Gas turbine plants the US is now building, I don’t think there will be much spare NatGas Capacity in another 4 to 8 years (guess) as all those new plants will be very hungry for NatGas.

          2. At 3000K, gas molecules would probably turn into plasma. That plasma, maybe, could be somewhat skillfully cooled into some petro-liquid. You just need a right proportion of C and H atoms.
            Don’t believe that 3000K is attainable at industrial scale, however. A lot of things can be made only in laboratory – at laboratory scale 😉 A bit like CERN – a big machinery to attain special conditions in a very small space, in fact.

            1. Chemical processes can be applied to NatGas to make into liquid HCs, Ammonia, or pure hydrogen. These usually just use catalysts and simple chemical reactions. I believe converting NatGas to ammonia has the high tech challenge and the process has been in industrial production since the 1890’s.

    2. Could you be more precise? Can’t find anything about it on the net.
      3000 K is really a lot, 6000 K is a temperature in a close vicinity of nuclear explosion (hypocenter).
      3000 K is much much more than LNG temperature.
      For sure it would be endothermic process, meaning it would consume more energy than give back. You will not get back petrol generating 3000K temperature. So, do we have so much gas?!
      Even German engineering must comply with laws of nature.

      1. If you read the article, which apparently is based on articles up to only 2006, they have reported to have reached temperatures up to nuclear fusion within the bubble. It’s all within the bubble. Goes against all the heat laws I’m used to thinking about, but this science has been reality since 1934. Still don’t think I would try this commercially in my back yard, first.

        1. Yes, I have read.
          The crucial information:
          ‘The bubbles are very small when they emit the light—about 1 micrometre in diameter—depending on the ambient fluid (e.g., water) and the gas content of the bubble (e.g., atmospheric air).’

          It seems that it is essentially the effect at the micro-world level, and so it would be hard to scale it up, or even to observe.

          1. Geese, it’s far beyond me to argue the science, period. Just reporting what I found. And what I found might not be correct. The science Cameron talked about was solo, this is sono. I thought it was a mistype, maybe not. And without more info from Cameron, I am just going to file it away.

            1. bunch of BS…. Thermo and Nature cannot be fooled, the same amount of energy is required to convert NG to longer hydrocarbons regardless of the claptrap. The only difference is how you inject energy in the system. The current commercial version is Shell’s and Sasol’s GTL plants. Costs have been coming down with more efficient synthesis gas production technologies but still costs are higher than LNG.

            2. I have no idea, but thanks for the info. I didn’t even realize that was happening.

      1. I used the same link, above. Don’t hammer me, I just commented on what was posted, don’t shoot the messenger.

  18. This is in the Sunday edition of the older of the two local rags in my neck of the woods:

    Tullow and Jamaica: Why the silence over the big oil and gas find?

    Why is Jamaica not being given a full update on the Walton-Morant Licence given to Tullow Oil and the United Oil and Gas, regarding the estimated 229 million barrels of recoverable offshore oil and gas that have been discovered?

    The Caribbean is identified as the source for future big-oil find. This is why the Government ought to update the public on what is happening in this important area of national interest.

    Oil analysts say that 100 per cent of Jamaica’s estimated oil and gas reserves are easily recoverable…..[snip]

    JAMAICA’S INVESTMENT POTENTIAL

    Based on a 2017 estimate, Jamaica’s oil find puts us just below Trinidad and Tobago (T&T) in terms of proven oil reserves. This ranking is provided by the US Energy Information Administration, which is part of the US Department of Energy.

    Venezuela is ranked number one, as of 2017, with 300,878 million barrels; T&T number 53, so Jamaica would be coming in this global ranking at number 54. This would be ahead of Bolivia, which is currently ranked number 54.

    Jamaica’s offshore oil potential is so good that Polarcus Adira – an oil, seismic survey vessel – safely completed its work “under-budget approximately a week ahead of schedule”, United Oil and Gas reported to its investors.

    I have mixed feelings about this. If this turns out well, this “big find” of less than three days of world petroleum consumption, might provide a nice shot in the arm for the local economy that, is currently doing okay according to some pundits. On the other hand, based on recent scandals surrounding corruption and nepotism at the local, loss making, state owned oil refinery, I have zero confidence the proceeds of any deals would be managed well.

    To demonstrate the reason for my misgivings, When I was born in 1961, one year before Jamaica gained independence. I faced a brighter future than any baby born in Singapore in the same time frame. Singapore gained independence in 1965 and when the first prime minister of Singapore, widely regarded as the “father of the nation”, Lee Kuan Yew, died in 2015 the same newspaper ran the following piece

    Singapore sorrow – Seaga mourns death of ‘friend’, Lee Kuan Yew

    Locally, he was frequently referenced by critics of those responsible for Jamaica’s economic development. Those critics note that Lee visited the island after Independence in 1962 to examine the growth strategies being employed and successfully transferred some of those ideas to his homeland, while Jamaica floundered.

    Fast forward from the sixties to the present and we have a comparison of Singapore and Jamaica at the following web page:

    Singapore, Jamaica and the late Lee Kuan Yew

    GDP

    As at 2016, Singapore`s GDP (PPP) per capita stood at 90,724, fourth in the world behind Qatar, Luxemburg and Macao. Jamaica`s GDP (PPP) is 8,991. In the 1st quarter of 2017, Singapore was rated as one of the least corrupt countries, and ranked 7th in the world. In 2016, Jamaica was ranked 83rd in the world.

    Economy

    Jamaica`s economy is based mainly on forestry, agriculture, tourism and financial services, with tourism being the main income generator for the island. Singapore has a market driven economy that is considered one of the best in the world. It is also a tax haven. Known for its green city, it is regarded as a finance and transport hub. As at the first quarter of 2015, Singapore`s unemployment rate was below 1.8%. In March 2017, Changi International Airport was selected as the best airport in the world. A position it has maintained for five consecutive years.

    Jamaica is known as the land of reggae music, Bob Marley, Blue Mountain coffee and Usain Bolt. Our music and athletes bring us great pride and have made significant strides in the international arena. Jamaica`s Blue Mountain Coffee is regarded as the best in the world. The main income earner for the island is tourism. We could consider turning Jamaica into an international training ground for athletes. This could bring further income to our island and help to boost our economy. Jamaica`s unemployment rate as at 2016 was 12.9%.

    Not mentioned in the comparison of the economies was Jamaica’s considerable endowment of bauxite, a significant source of income for the island. In the almost six decades I have been on this earth, Singapore has become a developed nation, while Jamaica has remained a heavily indebted, developing, third world nation! So much for my brighter future!

    1. Hint: Singapore has never won a Nobel Prize (it is a corporate state, where you can’t chew gum on the Street).
      Denmark? About the same size, and has 12 plus Nobel Prizes.
      (maybe I have a issue with Singapore- they stamped “shit” into a friends passport because his hair was a bit long)

    1. Thank you Boomer II,

      Just what I needed as a starting point for a future article.

      I believe there are two principle reasons economists keep missing the mark, the first is an incredible underestimate of the importance of energy production in the economy. Another reason is that marketing is not included in their models. Marketing has a tremendous influence on economic phenomena.

      As an example I see the whole LTO phenomenon as a marketing phenomenon. I keep seeing articles reporting that the LTO took all the experts by surprise. This is false. In 2012 Leonardo Maugeri took off from his job as CFO at Eni and went to the Kennedy School of Business where he wrote a paper in which he predicted that LTO would completely transform the oil industry and that production would explode. His article was shredded by peak oilers: bad numbers, didn’t mention negative cash flow, and completely glossed over high decline rates. Those of us who had read Rune Likvern’s Red Queen articles were skeptical. But several investment mailing lists I was on launched a tremendous marketing campaign based on Maugeri’s article: LTO was going to be the next killer investment. This marketing campaign convinced investors to make Maugeri’s prediction come true. Had investors known that they were investing in an extraction industry that would still be cash flow negative 7 years later with 50% of the production coming wells less than a year old and 70% coming from wells less than two years old after 160 bankruptcies and that up to 50% of the financed wells wouldn’t pay out, I doubt that they would have put up as much money, and LTO would have been a much smaller phenomenon than it is.

  20. Reuters: Saudi Arabia says two Saudi oil tankers attacked near UAE waters

    No info on who is behind it. From what I read previously, oil tankers can usually be repaired so consequences for global export are negligible unless a lot of ships are attacked in a short period of time. It would be a lot worse if loading facilities are damaged. Guess that is a lot more difficult though.

    https://www.reuters.com/article/us-saudi-oil-tankers-fujairah/saudi-arabia-says-two-saudi-oil-tankers-attacked-near-uae-waters-idUSKCN1SJ088?il=0

    1. from the BBC

      “Intertanko, an association of independent tanker owners and operators, said it had seen pictures showing that “at least two ships have holes in their sides due to the impact of a weapon”, Reuters news agency reported.”

      I guess with modern tankers being double hulled and very big, they are harder to sink than they were in the 1970s, but how many need to be holed before ships start refusing to sail? How big a hole can you make with an RPG or similar weapon fired from a speedboat?

      Oil price has risen a bit, but these are in danger of becoming interesting times

      1. It’s rather difficult to fire an RPG from a moving boat and hit another boat right at the waterline, unless it’s perhaps done rather closely. The arming range for RPG’s is 5 to 10 meters so it is possible, but quite suicidal.

    3. No blast marks on the metal so not high explosive. Looks like collision damage. See pics of USS Cole for an example of blast markings. See USS John S McCain for an example of collision damage.

    4. Just another US false flag to start another War, this time with Iran. Iran has nothing to gain by attacking tankers when it knows the US is ready for war. US, Israel & KSA have been trying to trick Iran into starting a war, but its not falling for it. So now its false flags blaming Iran. US is targeting the last two independent Oil exporter nations left: Iran & Venezuela. When its done then it starts WW3, unless its war with Iran triggers WW3. Iran has nukes and will use them if provoked.

      Lets see:
      Assad is using chemical weapons on his own people (false flag: it was the rebels that did it)
      Saddam has Weapons of Mass Destruction
      Gaddafi was killing women & childeren (or what ever the nonsense it was to permit them to bomb Libya)
      vietnam gulf of tonkin: the alleged stray bullet that enabled the US to enter the war.

      Same BS tactics over & over with the same results: More defense spending to create river of blood & suffering.

      1. Latest news here a while ago: USA intends to send 120,000 soldiers to Persian Gulf area. Sounds similar to one Swedish king in 1600’s: I have an army now, so I need a war to use it to something before it collapses in disease etc (well, probably US troops nowadays have a better hygiene processes…)

        S

      1. The Iran should have no problem to deliver some drones to their pets, ahm the Huthi in Jemen.

        They are experienced to drive deep into SA with their jeeps and do things there. They’ve done mortar attacks, stealing material or just raiding military bases before.

        Only my 5 cents, not any proof.

      2. Very impressive capability for the Houthis to hit something as small as a booster station from such a great distance!

        1. They are making raids deep into SA since years with small task forces, supported by local tribes. So it’s not from that far away. Saudi officials don’t talk that much about it because it’s too emarrassing for them.

          Anyways, it was a drone – so only driving into drone range then start the thing.

          Since this can be only done sporadic, they can’t close the pipeline for long – it’s only an action here and there. Guerilla war at best.

          Edit:
          Found a german newspaper article, they speak of Houthi drones. The Houthi have made an offical statement it was their attack:

          https://www.zeit.de/politik/ausland/2019-05/naher-osten-saudi-arabien-drohnenangriff-oelpipeline-sabotage-betrieb

          1. Thanks–
            This is getting interesting.
            Iran is making it clear that SA is not going to be able to move their oil.

      3. Turn out to be fake. Satellite photos on the site show no damage. I think,KSA if creating fake attacks to push the US to attack Iran.

  21. 2019-05-13 (Bloomberg) China to raise tariffs on U.S. LNG to 25%, additional tariffs do not include crude oil

  22. No need to worry about fast disruption of oil by EV’s. According to the CEO of Canary, oil and the ICE will stay robust for a long time, happily going hand and hand with EV’s into the future.

    >The Oil Sector Will Survive The Arrival Of The Electric Car Just Fine

    Electric vehicles won’t be the disruptor to oil products in the same way that digital technology was to photographic film or iPhones were to cellular phones. There will be no Kodak moment for Big Oil. That’s because electric vehicles and conventional gasoline- and diesel-powered automobiles will co-exist. It won’t be a zero-sum game, with ample room for growth on both sides, particularly as internal combustion engines become increasingly efficient.

    Even under the rosiest forecast for electric vehicles, oil demand will remain robust through the mid-century. Modeling by U.K. oil major BP shows that even a worldwide ban on new internal combustion engine vehicles would create a 10 million barrels a day dent in oil demand by 2040. Considering the oil market is closing in on 100 million barrels a day of demand this year, that equates to a 10% hit to the oil industry – hardly a death blow.

    It’s not just Big Oil that believes this to be true. The International Energy Agency (IEA), the watchdog for large, developed energy-consuming economies, agrees. According to the IEA, an estimated 50 million electric vehicles will be in operation by 2025, and 300 million by 2040, compared to about 2 million vehicles currently on the road. That growth is expected to reduce global oil demand by 2.5 million barrels a day or about 2%. A factor of 6-to-1 easily offsets that reduction with increased demand from petrochemicals, trucks, shipping and aviation – areas the IEA says could lead to net demand growth of up to 14 million barrels a day.

    https://www.forbes.com/sites/daneberhart/2018/03/22/the-oil-sector-will-survive-the-arrival-of-the-electric-car-just-fine/#65c1a2ab7155

    So who is right, The Tony Seba crowd, BP, the IEA, the peak oil prognosticators? I think we will find out soon enough, don’t you? Who will get caught with their pants on fire?

    2. Who will get caught with their pants on fire?

      I assume that is a rhetorical question!

      According to the IEA, an estimated 50 million electric vehicles will be in operation by 2025, and 300 million by 2040, compared to about 2 million vehicles currently on the road. That growth is expected to reduce global oil demand by 2.5 million barrels a day or about 2%. A factor of 6-to-1 easily offsets that reduction with increased demand from petrochemicals, trucks, shipping and aviation – areas the IEA says could lead to net demand growth of up to 14 million barrels a day.

      Well, Ok! Assuming Peak Oil never happens, due to infinite abiotic sources, we know that we still need to stay below 1.5 °C to maintain some semblance of industrial civilization.

      Going above 2 °C probably sets off a number of very nasty feedbacks.

      Beyond 3 °C all bets are off. Global ecosystems as we currently know them are no longer viable. Food webs are disrupted, agriculture is heavily impacted… There is no IEA to worry about and Civilization collapses. GAME OVER!

      Cheers!

      1. RF is already at 4, they just don’t know it yet because the ocean is taking up most of the heat and global dimming is higher than thought. Once we clean the air we will find out quickly. So right now fossil fuels are keeping things going with global dimming.

        But still, I take it you don’t see a happy hand in hand of ICE and EV motoring on into the future. Should know by 2025 where things are headed.

    3. I continue to believe it’s not how many EVs we have. If people drive their ICE vehicles less, or drive far more efficient ones, that also reduces oil consumption. Whatever it takes. It doesn’t have to be only one approach.

      1. I have been practicing that very thing for quite a while now. Problem is to get the rest of the gang along on that one.

      2. Its already underway in the US. Its Asia (India & China) that are adding new cars like crazy. I think US is at or below its Peak:
        1. Boomers are retiring & driving less
        2. More people are working from home
        3. Millennials prefer to live closer to work & fun and take trains to commute.

        Biggest threat to civilization & the planet is a nuclear war which gets closer day by day. I imagine once the world recognizes global peak oil production, the gloves come off. Since Dick Cheneys 1999 (the US need another Iraq) the US has been targeting major Oil exporters one by one. Now only Iran & Venezuala remain. VZ will be a pushover for the USA, Iran not so much since it has Nukes (and will use them if the US tries to *Iraqisize* it.

        China & Russia see what is going on and thus are modernizing their nuclear arms. China is on a massive military build up with modern Stealth aircraft, New aircraft carries & Boomer\attack subs. The world is locked into another Arms race that is all but guaranteed to kill billions and trash the planet.

  24. Hi Dennis.
    When URR is calculated/estimated it seems like there is such a high level of uncertainty that to chart resultant production estimates as a line, rather than a wide band of probability, is too much of a simplification.
    Do you concur?
    Secondly, ‘recoverable’ assumes knowing the economic conditions. For example, at $20 a barrel and with a $7 carbon tax, no USA shale oil would be ‘recoverable’. Have you done or seen charting with variable oil price levels? I suppose the relationship between price and ‘recoverability’ is an impossible one to nail down (and thus chart). Ex- If electric based transport becomes cheaper in the 2030’s, surely that will effect oil price, and thus ultimate ‘recoverability’ of oil.
    Pardon if these queries seem elementary, but its a new line of attempted understanding for me.

    1. Hickory,

      Yes the URR is quite uncertain which is why I often give 3 scenarios (low, high, and best guess).

      There are a bunch of moving parts as I do a conventional model, a tight oil model, and an extra heavy oil model and each could have three scenarios and there would then be 27 different combinations of scenarios. This is before we consider oil price which I do only for the tight oil models, for the World model I simply assume demand is always high enough for oil supply to be produced profitably, likely to be a poor assumption in practice. In a few cases I have tried to look at how rising EV use might curb some oil demand so that supply would be constrained by demand and might fall more rapidly than my models. A lot of oil is used in air and water transport and some for home and water heating and I have not analyzed those sectors.

      In any case it is certainly true that lower oil prices due to lack of demand might lead much of the high cost resource (oil sands, tight, oil, and ultra deep water oil) in the ground, ultimately that would be better for the planet, but accurate forecasts are impossible.

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